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Financial Emergencies That Could Require a Loan to Fix

When you don’t have the money to pay for something you want or need, it is natural to borrow the money. Though convenient to use on occasion, all too often, consumers rely on loans too much to get them out of jams and splurge on big-ticket items only to end up digging a deeper hole for themselves. The most efficient way to ensure that loans remain a convenience and not a hindrance is to only borrow funds in emergent situations that can be resolved in a short period of time.

Car Repair

One common short-term emergency when you need an unsecured personal loan is an unexpected car repair. Though many individuals budget for common car expenses like gas, oil changes, and tire rotations, many don’t account for expenses like car repairs. Should the car break down and you need to get it fix, a short-term personal loan would cover the costs and provide you with enough time to pay the balance in full.

Utility Bills

Although utility costs should be a line item in your household budget, it goes without saying that the prices can change without a moment’s notice. When rates increase due to fluctuations in the market or the time of year (like increased energy costs in the winter), this can throw you off budget. In this instance, a short-term loan would cover the increase while you adjust your budget to handle the costs going forward.

Home Repair

While you probably shouldn’t take out a short-term loan for a home improvement, there are some home repair emergencies that just can’t wait until you’ve saved enough. A plumbing or electrical issue, for instance, needs to be repaired to prevent further damage to the property and to improve the functionality of the space. Since home repairs like this can be several hundred or thousand dollars, a short-term loan can be used to pick up the expense.

Personal Injury

Accidents happen all the time and you never know when it might happen to you. If you’ve suffered injuries that will require you to be out of work for a while you’ve likely filed for disability. Since disability coverage can take a while to kick in, you may need to apply for a short-term loan to tide you over. This can cover immediate expenses and bills until your regular disability starts depositing.

Medical Expense

Although it is best to have a health savings account for financial emergencies such as these, sometimes the costs can be more than you have tucked away. If you’re dealing with a medical expense like copays, hospital stays, medical devices, or prescription costs, you can apply for a small loan to cover the costs and repay it over time.

You just never know when a financial emergency could arise. When it does, borrowing is a safe and effective solution. Be that as it may, you should only consider borrowing funds in short-term emergencies like those described above. Trying to get by on a loan for other circumstances like being unemployed, a major home renovation, or getting out of debt isn’t ideal in that you may not be able to repay it. Therefore, analyze your circumstances carefully, and budget your repayment plan prior to applying to ensure you’re borrowing responsibly.